Picture Perfect S&P Short Setup — Don’s Daily Brief

by | Jan 9, 2023

After a very slow market with very little conviction, I’m seeing a beautiful setup in stock markets right now. You can actually see the same pattern in the NASDAQ, but I’m going to walk you through the S&P 500 right now.

You may know that when I look at the Volume Profile, what I really like to look for — for a short — is declining volume at higher prices. And then as you move down, the volume builds and you have a sharp drop off.

Well if we look at the S&P 500, we can see this pattern on the 1 day chart. Basically over the weekend, we have this volume building up as the prices move down and then you have a very sharp drop off that takes us down about 100 points or so potentially.

And then if you look on the 5 day, you get the exact same sort of pattern. It looks even better, indicating even more downside.

Also on the 10 day chart, you see a similar pattern of lower volume at higher prices. Then as price goes down, volume rises and rises until you get a sharp drop off.

The common theme is a lack of participation at higher prices, growing volume as the price drops and then a sharp drop off.

I believe 2023 is going to be another disappointing year for equity markets.

► So for today’s free pick, I want to add to our position on SDS.

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